Assessment proceedings under the Punjab General Sales Tax Act, 1948, commence in the case of a registered dealer either when a return is furnished or when a notice is issued under Section 11(2) of the Act. If such proceedings are taken within the prescribed time, no question of limitation arises even if the assessment order is finalized after the expiry of the prescribed period.

Judgement

SHELAT, J. : This appeal by certificate granted by the Punjab High Court raises the following question:-

"Where the sales tax authority is not satisfied with the returns filed by a registered dealer and issues a notice under Section 11(2) of the Punjab General Sales Tax Act. 1948 before the expiry of three years from the termination of the period for furnishing returns but finalises the assessment order after three years from the aforesaid date, whether such an assessment order can be said to be time barred and, therefore, without jurisdiction".

2. A few facts for understanding this question may first be stated. The respondent is a partnership firm registered under the Act and was at the material time carrying on business in vegetable ghee, sugar and other commodities. The assessment year in question commenced from, April 1, 1955 and ended on March 31, 1956. The dealer furnished four quarterly returns as required by the Rules framed under the Act viz., for the period April to June, 1954 on October 1, 1954, July to September 1954 on December 16, 1954 October to December, 1954 on March 12, 1955 and for January to March, 1955 on June 16, 1956. Though these returns were not filed within 30 days after expiry of each of the quarters as required by the Rules, no objection was taken by the Assessing Authority. The firm deposited three sums of the time of filing the returns aggregating to Rs. 10,649-4-0. Subsequently, it paid a further sum of Rs. 14,477 on the basis of those returns.

3. Not satisfied with these returns, the Assessing Authority issued a notice under S. 11 (2) in form S. T. XIV which is a comprehensive form and which admittedly was served on the dealer on January 11, 1957, i.e. before three years expired, from each of the respective dates for filing of the said returns. This is clear from the fact that the date for filing the first return which admittedly was served on the dealer on January 11, 1957, i. e., before April 30, 1955. On July 5, 1960, the Assessing Authority examined Tara Chand, a partner in the firm but did not finalise the assessment order on that day as he wanted to make further enquiries and passed the assessment order impugned in this appeal on August 11, 1960,. The Assessing Authority disbelieved the accounts produced by Tara Chand and added sales of Rs. 4,00,000 in the gross turnover shown in the returns and assessed the firm on the turnover of Rs. 16,92,148-1-0 to a tax of Rs. 33,127-1-6. After giving credit of the said two sums deposited by the dealer the balance of Rs. 8,000 and odd remained payable by the firm.

4. The firm filed a writ petition in the High Court challenging the validity of the assessment order on the ground that as it was made after three years from the dates when the said returns had to be furnished, it was without jurisdiction. The department on the other hand urged (1) that the order was made under S. 11(3) which provided no limitation and (2) that assuming that the order was passed under S. 11(4) or S. 11(5) proceedings in respect thereof having commenced on the issuance of the said notice dated January 11, 1957 which was within time, no question of the order being time-barred would arise. These were the only contentions raised before the High Court and as no contention regarding the merits of the order was raised, the High Court did not enter into that question. We need not also go into the merits of the assessment and we will consider only the question whether the order was invalid on the ground taken by the dealer in the High Court. The High Court following its earlier decision in M/s. Rameshwar Lal Sarup Chand v. U. S. Naurath, The Excise and Taxation Officer, (1963) 65 Pun LR 768 held that the order was an assessment on best judgment basis under S. 11(4) and as it was made after three years after the close of the assessment year it was without jurisdiction.

5. For the reasons which we shall presently set out, the question whether the assessment order was passed under S